Walsh Company manufactures and sells one product. The followinginformation pertains to each of the...

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Accounting

Walsh Company manufactures and sells one product. The followinginformation pertains to each of the company’s first two years ofoperations:
Variable costs per unit:
Manufacturing:
Direct materials $ 25
Direct labor $ 12
Variable manufacturingoverhead $ 2
Variable selling andadministrative $ 1
Fixed costs per year:
Fixed manufacturingoverhead $ 400,000
Fixed selling and administrativeexpenses $ 90,000
During its first year of operations, Walsh produced 50,000 unitsand sold 40,000 units. During its second year of operations, itproduced 40,000 units and sold 50,000 units. The selling price ofthe company’s product is $51 per unit.
Required:
1. Assume the company uses variable costing:
a. Compute the unit product cost for Year 1 and Year 2.
b. Prepare an income statement for Year 1 and Year 2.
2. Assume the company uses absorption costing:
a. Compute the unit product cost for Year 1 and Year 2.
b. Prepare an income statement for Year 1 and Year 2.

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All working forms part of the answer Requirement 1 Under variable costing unit cost of product only includes Variable MANUFACTURING cost Answer Part a Year 1 Year 2 Direct Material 2500 2500 Direct Labor 1200 1200 Manufacturing Overhead 200 200 Unit Product cost 3900 3900 Answer Part b Year 1 Year 2 Sales revenue 204000000 See Answer

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In: AccountingWalsh Company manufactures and sells one product. The followinginformation pertains to each of the company’s...Walsh Company manufactures and sells one product. The followinginformation pertains to each of the company’s first two years ofoperations:Variable costs per unit:Manufacturing:Direct materials$25Direct labor$12Variable manufacturingoverhead$2Variable selling andadministrative$1Fixed costs per year:Fixed manufacturingoverhead$400,000Fixed selling and administrativeexpenses$90,000During its first year of operations, Walsh produced 50,000 unitsand sold 40,000 units. During its second year of operations, itproduced 40,000 units and sold 50,000 units. The selling price ofthe company’s product is $51 per unit.Required:1. Assume the company uses variable costing:a. Compute the unit product cost for Year 1 and Year 2.b. Prepare an income statement for Year 1 and Year 2.2. Assume the company uses absorption costing:a. Compute the unit product cost for Year 1 and Year 2.b. Prepare an income statement for Year 1 and Year 2.


Variable costs per unit:
Manufacturing:
Direct materials	$	25
Direct labor	$	12
Variable manufacturingoverhead	$	2
Variable selling andadministrative	$	1
Fixed costs per year:
Fixed manufacturingoverhead	$	400,000
Fixed selling and administrativeexpenses	$	90,000